saurabhjaglan
March 22nd, 2012, 11:18 AM
MUMBAI: Concerned over the fast paced growth of gold loans (http://timesofindia.indiatimes.com/topic/gold-loans) in the country, the Reserve Bank of India has yet again come out with curbs on the business. The new norms restrict loans to 60% of the jewellery value and bar loans against coins and gold biscuits.
The central bank has said that finance companies that specialize in lending against gold will need to have a net worth that is at least 12% of their loans exposed to risk. Lenders said that the concerns were unfounded and would risk driving small borrowers back to unregulated moneylenders. Earlier, RBI (http://timesofindia.indiatimes.com/topic/RBI) had withdrawn the priority sector status to gold loan finance companies-a status which had encouraged banks to lend them money.
Some see this as a move to discourage investment in gold, which is turning to be a drain on foreign exchange resources. RBI's measures comes a week after FM doubled import duty on gold. However, lenders deny that restrictions on lending would impact demand.
Ref :http://timesofindia.indiatimes.com/business/india-business/Gold-jewellery-wont-get-you-loans-beyond-60-of-value/articleshow/12362310.cms
The central bank has said that finance companies that specialize in lending against gold will need to have a net worth that is at least 12% of their loans exposed to risk. Lenders said that the concerns were unfounded and would risk driving small borrowers back to unregulated moneylenders. Earlier, RBI (http://timesofindia.indiatimes.com/topic/RBI) had withdrawn the priority sector status to gold loan finance companies-a status which had encouraged banks to lend them money.
Some see this as a move to discourage investment in gold, which is turning to be a drain on foreign exchange resources. RBI's measures comes a week after FM doubled import duty on gold. However, lenders deny that restrictions on lending would impact demand.
Ref :http://timesofindia.indiatimes.com/business/india-business/Gold-jewellery-wont-get-you-loans-beyond-60-of-value/articleshow/12362310.cms